2003 (4) TMI 101 - SC - Central Excise

Supreme Court upholds 'Himtaj oil' classification as Ayurvedic medicament, rejects Revenue's appeal.

The Supreme Court affirmed the classification of 'Himtaj oil' as an Ayurvedic medicament, rejecting the Revenue's appeal. CEGAT's decision was upheld, ... Classification of goods - Ayurvedic medicament - popular meaning of 'medicine' - evidentiary value of regulatory licences and expert reports - market enquiries as evidence of ordinary commercial and consumer perceptionClassification of goods - Ayurvedic medicament - evidentiary value of regulatory licences and expert reports - market enquiries as evidence of ordinary commercial and consumer perception - Whether 'Himtaj oil' is correctly classifiable as an Ayurvedic medicament under sub-heading 3003.30 rather than as a perfumed hair oil under sub-heading 3305.10. - HELD THAT: - The Tribunal's finding that 'Himtaj oil' is an Ayurvedic medicament is sustained. The Assistant Collector's acceptance of the respondents' classification was supported by multiple independent materials: a drug licence issued by the Drug Controller; a letter from the Superintendent of the Ayurvedic Department identifying the product as Ayurvedic; an Institute of Postgraduate Education and Research in Ayurved study classifying the oil as an Ayurvedic product with therapeutic uses; a Range Officer's market inquiry reporting that dealers, wholesalers, retailers, customers, chemists and druggists uniformly treated the product as an Ayurvedic medicament; a re testing report of the Chief Chemist showing absence of any Ayurvedic perfumery; and an SSI registration under a drug licence for manufacturing Ayurvedic oil. These materials together establish that the product is regarded and marketed as an Ayurvedic medicament by both regulators and the market, justifying classification under sub-heading 3003.30. The Court distinguished the decision relied upon by the Revenue on its facts, noting that in that case there was no evidence of popular or professional recognition of the product as a medicine, whereas here the market inquiry and regulatory materials supply that evidentiary foundation. On that basis the Tribunal's acceptance of the respondents' classification was correct.The Tribunal's order holding 'Himtaj oil' to be an Ayurvedic medicament under sub-heading 3003.30 is upheld and the Revenue's appeal is dismissed.Final Conclusion: Appeal dismissed; the classification of 'Himtaj oil' as an Ayurvedic medicament is affirmed on the basis of regulatory licences, expert/study reports and market inquiries showing ordinary commercial and consumer perception of the product as a medicine; no order as to costs. Issues: Classification of 'Himtaj oil' as Ayurvedic medicine or perfumed hair oil.Classification of 'Himtaj oil' as Ayurvedic medicine:The Respondents classified 'Himtaj oil' as Ayurvedic medicine under sub-heading 3003.30. The Assistant Collector accepted this classification based on various materials, including a drug license, a letter from the Ayurvedic Department, a study report from an Ayurvedic institute, a market inquiry report, a re-testing report from the Chief Chemist, and an SSI registration certificate. The Commissioner (Appeals) overturned this decision, stating lack of evidence that the product was prescribed by medical practitioners or used as medicine by the common man. However, CEGAT allowed the Respondents' appeal, affirming that 'Himtaj oil' was indeed an Ayurvedic medicament. The Supreme Court upheld this decision, emphasizing that the material evidence supported the classification as an Ayurvedic product, contrary to the Revenue's arguments.Relevance of arguments regarding 'Bhanphool oil':The Additional Solicitor General argued that the decision on 'Bhanphool oil' classification should apply to 'Himtaj oil' as well. Referring to a previous case, it was highlighted that the popular understanding of a product should prevail over scientific or technical meanings. The Court had ruled in a separate judgment regarding 'Bhanphool oil,' which influenced the decision on 'Himtaj oil.' The Court emphasized that the common perception of a product as a medicine was crucial, supported by evidence from the Range Officer and other materials. The Court rejected the Revenue's arguments and upheld the classification of 'Himtaj oil' as an Ayurvedic medicament based on the available evidence.Final Decision:The Supreme Court dismissed the Revenue's appeal, upholding the classification of 'Himtaj oil' as an Ayurvedic medicament. The Court found no fault in CEGAT's decision, as the material evidence and common perception supported the classification. No costs were awarded in this matter.